GM Says Its Poised For Overseas Growth

DETROIT (AP) — GM told potential investors on Tuesday it will be the first global automaker to sell more than 2 million vehicles in China this year, portraying itself as poised for overseas growth a year after exiting bankruptcy protection. General Motors Co. executives are trying to convince investors that the new company, which emerged from a government-led restructuring last July, is capable of making money because of its international strength and lower expenses.

DETROIT (AP) — GM told potential investors on Tuesday it will be the first global automaker to sell more than 2 million vehicles in China this year, portraying itself as poised for overseas growth a year after exiting bankruptcy protection.

General Motors Co. executives are trying to convince investors that the new company, which emerged from a government-led restructuring last July, is capable of making money because of its international strength and lower expenses. The automaker, now a private company 61 percent held by the government, plans to sell shares to the public as early as the fourth quarter of 2010.

Executives are also making the case that GM is clawing back from Chapter 11, when it needed roughly $50 billion in government aid to stay alive.

"All in all, we're the best-positioned U.S. automaker in the world's critical emerging markets," CEO Ed Whitacre told financial analysts during a presentation here.

GM's market share in China is 13.3 percent, which it expects to rise marginally in the next few years. But GM's sales there will grow, even with small market share increases, because overall Chinese auto sales are expected to keep climbing, including a 20-percent jump this year to 16.5 million cars and trucks.

The automaker runs its China operations with partner Shanghai Automotive Industry Corp.

David Silver, an analyst with Wall Street Strategies, a New York-based independent equity research firm, said GM wanted analysts to know about its international sales with the stock sale coming.

"GM, as much as it has been an American company, it's now an international company," he said. He said GM's growth internationally will be far higher than in the U.S., which used to be GM's biggest market.

GM has led all automakers in sales to the Chinese the past five years, with sales up 67 percent since 2008, said President of International Operations Tim Lee.

GM plans to roll out nearly 70 new or upgraded vehicles in international markets between now and 2014, further strengthening its position, Lee said. GM will use car designs that will be distributed across the globe, but also has cars and trucks that are designed specifically for markets.

Asian, European and South American operations are the key to GM's sustained growth and profitability, GM executives said.

GM has a chance to boost sales by 2.6 million vehicles in the U.S., China, India, Russia and Brazil by 2014 because of growing demand, Chief Financial Officer Chris Liddell said. GM sold about 7.5 million vehicles globally last year.

Liddell also told analysts that GM will use every spare dollar of cash it earns to cut its debt and pension obligations to zero. The company had $30 billion in cash at the end of the first quarter, and $42.2 billion in debt, preferred stock and pension obligations.

Repayment will take several years, but GM should be able to do it because its expenses and break-even levels have been reduced, he said.

GM has repaid $6.7 billion of its financial aid to the U.S. government, but the remaining $43.3 billion has been converted to equity in the company. The government hopes to get at least part of the remaining balance back in the public stock sale.

GM made $865 million in the first quarter and is cautiously optimistic that it will have a profitable year.

GM is also in the midst of restructuring its European operations, which long have been a money loser. The company recently decided to fund the restructuring itself after the German government refused to approve aid.

Mark James, vice president and chief financial officer of Opel/Vauxhall Europe, said GM expects to break even in Europe by 2011 and be profitable going forward. He said the company plans 8,300 layoffs that should be completed by the end of 2011.

With debt lowered through bankruptcy restructuring, reduced labor costs, and new products that are making good profits, GM executives said the company is ready to prosper in good times and make it through the inevitable downturns.

But Vice Chairman for Corporate Strategy Steve Girsky warned that the next decade could be even tougher for the company than the past 10 years.

New foreign competitors will come to the U.S., which also is seeing new automakers spring up such as Tesla and Fisker. The two startups are building electric and hybrid cars. Fuel economy regulations will dry up GM's traditional profit sources in large trucks and sport utility vehicles.

Girsky said he recently had breakfast with a venture capitalist who pointed out that new automakers will run Detroit out of the business by copying what it does well and shedding what it does poorly.

"We've got to make sure that doesn't happen," Girksy said.

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